September 28, 2009

Top 3 Reasons for Amanah Saham 1Malaysia (AS1M) Poor Response

Amanah Saham 1Malaysia (AS1M), a 10 billion fixed price unit trust fund, launched by Permodalan Nasional Berhad (PNB) in August, has received very poor response from Malaysians. As of current date, the fund is only 30 - 40% sold out, as compared to some other fixed price unit trust funds like ASM and ASW 2020, when the funds were sold out in a matter of hours.

Based on the feedback that I've gathered, here's the top 3 reasons why Malaysians are not responding well to the AS1M fund:

  1. Lack of dividend payout track record - Since AS1M is a new fund, there is no historical dividend payout record. Even though AS1M tracks 5-year MGS bond yield which typically has a yield of 4 - 5% (as opposed to KLIBOR for other fixed price fund), most of the Malaysians assume AS1M will be having low dividend rate.
  2. AS1M is not capital guaranteed - most of the Malaysians have the notions that once they're invested in AS1M, they might lose their capital.
  3. Lack of purchasing power - the government has been mopping up a lot of excess liquidity via the issuance of Sukuk bond, and the enlargement of ASM and ASW2020 funds. Since the public has invested most of their spare cash in the investments above, there is a lack of cash to invest further in such a large fund as AS1M.
Are these valid reasons for not investing in AS1M? Is AS1M worth the investment? In the next article, I will try to draw my own conclusion on the worthiness of AS1M fund.

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